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SCHRODER SERIES TRUST
PROSPECTUS
ADVISOR SHARES
JUNE 17, 1997
AS REVISED OCTOBER 8, 1997
Schroder Series Trust is an open-end management investment company offering by
this Prospectus Advisor Shares of four separate investment portfolios: Schroder
Large Capitalization Equity Fund, Schroder Small Capitalization Value Fund,
Schroder MidCap Value Fund, and Schroder Investment Grade Income Fund. Schroder
Capital Management Inc. ("Schroder") serves as investment adviser to each of the
Funds. Each Fund pursues its investment objectives through the investment
policies described in this Prospectus.
This Prospectus explains concisely the information that a prospective investor
should know before investing in Advisor Shares of the Funds. Please read it
carefully and keep it for future reference. Investors can find more detailed
information about the Trust in the March 1, 1997 Statement of Additional
Information, as revised September 12, 1997 and further amended from time to
time. For a free copy of the Statement of Additional Information, please call
1-800-464-3108. The Statement of Additional Information has been filed with the
Securities and Exchange Commission and is incorporated into this Prospectus by
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND
INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
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FUNDS AVAILABLE THROUGH SCHRODER FUND ADVISORS INC.
PLEASE CALL 1-800-730-2932 FOR COMPLETE INFORMATION AND
TO OBTAIN THE RELEVANT PROSPECTUS.
PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
SCHRODER CAPITAL FUNDS (DELAWARE) SCHRODER SERIES TRUST
SCHRODER INTERNATIONAL FUND SCHRODER LARGE CAPITALIZATION EQUITY
FUND
SCHRODER EMERGING MARKETS FUND SCHRODER SMALL CAPITALIZATION VALUE
FUND
INSTITUTIONAL PORTFOLIO SCHRODER MIDCAP VALUE FUND
SCHRODER INTERNATIONAL SMALLER COMPANIES FUND SCHRODER INVESTMENT GRADE INCOME FUND
SCHRODER U.S. SMALLER COMPANIES FUND
SCHRODER U.S. EQUITY FUND
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SCHRODER SERIES TRUST
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TABLE OF CONTENTS
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Summary of Expenses............................................................................. 4
Investment Objectives and Policies.............................................................. 6
Schroder Large Capitalization Equity Fund..................................................... 6
Schroder Small Capitalization Value Fund...................................................... 7
Schroder MidCap Value Fund.................................................................... 8
Schroder Investment Grade Income Fund......................................................... 8
Other Investment Practices and Risk Considerations............................................ 9
Portfolio Turnover............................................................................ 13
How to Buy Shares............................................................................... 13
How to Sell Shares.............................................................................. 14
Exchanges....................................................................................... 15
Determination of Net Asset Value................................................................ 15
Distributions................................................................................... 15
Taxes........................................................................................... 16
Management of the Trust......................................................................... 16
Performance Information......................................................................... 18
Additional Information About the Trust.......................................................... 19
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SCHRODER SERIES TRUST
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SUMMARY OF EXPENSES
Expenses are one of several factors to consider when investing in Advisor Shares
of the Funds. The following tables summarize the expenses incurred by each Fund
and attributable to its Advisor Shares, based (for all Funds except the MidCap
Value Fund) on its most recent fiscal year. Information for the MidCap Value
Fund is based on estimated expenses for the Fund's first full year of
operations. The Example shows the cumulative expenses attributable to a
hypothetical $1,000 investment in Advisor Shares of the Funds over specified
periods.
SHAREHOLDER TRANSACTION EXPENSES
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Maximum Sales Load Imposed on Purchases...................................... None
Maximum Sales Load Imposed on Reinvested Dividends........................... None
Deferred Sales Load.......................................................... None
Redemption Fees.............................................................. None
Exchange Fees................................................................ None
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ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
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<CAPTION>
Schroder Schroder
Large Small Schroder Schroder
Capitalization Capitalization MidCap Value Investment Grade
Equity Fund Value Fund Fund Income Fund
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Management Fees (after expense limitation)........... 0.75 0.95 0.90 0.38(1)
12b-1 Fees(2)........................................ None None None None
Other Expenses....................................... 0.76 0.73 0.70 0.99
Total Fund Operating Expenses (after expense
limitation)......................................... 1.51 1.68 1.60 1.37(1)
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(1) The Management Fees and Total Fund Operating Expenses for the Investment
Grade Income Fund reflect an expense limitation currently in effect. See
"Management of the Trust" below. In the absence of the limitation, Management
Fees and Total Fund Operating Expenses for Advisor Shares of that Fund would be
0.50% and 1.49%, respectively.
(2) Each Fund has adopted a Distribution Plan under Rule 12b-1 of the Investment
Company Act of 1940, as amended. The Funds presently make no payments under the
Distribution Plans, although payments made by a Fund under its Shareholder
Servicing Plan for Advisor Shares will be considered to have been made pursuant
to the Fund's Distribution Plan, to the extent such payments may be deemed to be
primarily intended to result in the sale of the Fund's Advisor Shares. See "How
to Buy Shares -- Distribution Plans."
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EXAMPLE
Your investment of $1,000 would incur the following expenses, assuming 5% annual
return and redemption at the end of each period:
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FUNDS: 1 year 3 years 5 years 10 years
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Schroder Large Capitalization Equity Fund.................... $ 15 $ 48 $ 83 $ 181
Schroder Small Capitalization Value Fund..................... $ 17 $ 53 $ 92 $ 200
Schroder MidCap Value Fund................................... $ 16 $ 51 -- --
Schroder Investment Grade Income Fund........................ $ 14 $ 44 $ 75 $ 165
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The tables and Example are provided to help you understand the expenses of
investing in Advisor Shares of each of the Funds and your share of the operating
expenses of each Fund attributable to its Advisor Shares. THE TABLES AND EXAMPLE
DO NOT REPRESENT PAST OR FUTURE EXPENSE LEVELS. ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE SHOWN. FEDERAL REGULATIONS REQUIRE THE EXAMPLE TO ASSUME A 5%
ANNUAL RETURN, BUT ACTUAL ANNUAL RETURN WILL VARY.
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INVESTMENT OBJECTIVES AND POLICIES
Each Fund has a different investment objective or objectives which it pursues
through the investment policies described below. Because of the differences in
objectives and policies among the Funds, the Funds will achieve different
investment returns and will be subject to varying degrees of market and
financial risk. The investment objectives and policies of each Fund may, unless
otherwise specifically stated, be changed by the Trustees of the Trust without a
vote of shareholders. As a matter of policy, the Trustees would not materially
change an investment objective of a Fund without shareholder approval.
Additional Funds may be created from time to time with different investment
objectives and policies.
If the securities rating of a debt security held by a Fund declines below any
minimum rating for securities in which the Fund may invest, the Fund will not be
required to dispose of the security, but Schroder will consider whether
continued investment in the security is consistent with the Fund's investment
objectives. Certain of the Funds may also use a variety of derivative strategies
including, without limitation, options, futures contracts, and forward
contracts, and mortgage-backed securities described below. See "Other investment
practices and risk considerations."
None of the Funds is intended to be a complete investment program, and there is
no assurance that any Fund will achieve its objective or objectives.
SCHRODER LARGE CAPITALIZATION EQUITY FUND
SCHRODER LARGE CAPITALIZATION EQUITY FUND'S INVESTMENT OBJECTIVE IS TO SEEK
LONG-TERM GROWTH OF CAPITAL. The Fund invests in common stocks and other
securities of companies with large market capitalizations that Schroder believes
offer the potential for long-term growth of capital.
The Fund will under normal circumstances invest primarily in equity securities
Schroder believes to be undervalued. In selecting such securities, Schroder will
focus on industries and issuers it believes offer the possibility for growth of
capital from earnings potential and other factors not fully reflected in current
market prices. Such factors may include, for example, a company's probable
future earnings, the ratio of its market value to its book value, and its
dividends, cash flow, financial strength, debt-to-capital ratio, working assets,
and competitive position, as well as other factors Schroder may consider
significant in a particular industry or under varying market conditions. In
identifying undervalued securities, Schroder may make investment judgments
contrary to those of most investors.
The Fund will normally invest at least 65% of its total assets in equity
securities, including common and preferred stocks and warrants to purchase
common or preferred stocks, of companies with large market capitalizations
(generally more than $5 billion). The Fund may invest the remainder of its
assets in equity securities of smaller companies or in debt securities if
Schroder believes they would help achieve the Fund's objective. Debt securities
in which the Fund may invest will be rated, at the time of investment, at least
Baa by Moody's Investors Service, Inc. or BBB by Standard & Poor's Corporation
or, if unrated, determined by Schroder at the time of investment to be of
comparable quality. Securities rated Baa or BBB lack outstanding investment
characteristics and have speculative characteristics and are subject to greater
credit and market risks than higher-rated securities. The Fund may also hold a
portion of its assets in cash or money market instruments.
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At times, Schroder may judge that conditions in the securities markets make
pursuing the Fund's basic investment strategy inconsistent with the best
interests of its shareholders. At such times, Schroder may temporarily use
alternate investment strategies primarily designed to reduce fluctuations in the
value of the Fund's assets. In implementing these "defensive" strategies, the
Fund would invest in high-quality debt securities, cash, or money market
instruments to any extent Schroder considers consistent with such defensive
strategies. It is impossible to predict when, or for how long, the Fund will use
these alternate strategies.
Until September 1997, the Fund was known as "Schroder Equity Value Fund."
SCHRODER SMALL CAPITALIZATION VALUE FUND
SCHRODER SMALL CAPITALIZATION VALUE FUND'S INVESTMENT OBJECTIVE IS TO SEEK
CAPITAL APPRECIATION. The Fund invests primarily in equity securities of
companies having a relatively small market capitalization (generally less than
$1 billion) that Schroder believes have potential for capital appreciation. In
choosing portfolio investments for the Fund, Schroder attempts to identify
securities whose potential for long-term capital appreciation is not fully
reflected in their market prices. This may be the result, for example, of the
market's undervaluation of a company's potential for earnings growth or of its
financial or business assets or other assets.
The companies in which the Fund invests may offer greater opportunities for
capital appreciation than larger companies, but investments in such companies
may involve certain special risks. Such companies may have limited product
lines, markets or financial resources and may be dependent on a limited
management group. While the markets in securities of such companies have grown
rapidly in recent years, such securities may trade less frequently and in
smaller volume than more widely held securities. The values of these securities
may fluctuate more sharply than other securities, and the Fund may experience
some difficulty in establishing or closing out positions in these securities at
prevailing market prices. There may be less publicly available information about
the issuers of these securities or less market interest in such securities than
in the case of larger companies, and it may take a longer period of time for the
prices of such securities to reflect the full value of their issuers' underlying
earnings potential or assets.
The Fund will normally invest at least 65% of its total assets in common and
preferred stocks, and warrants to purchase common or preferred stocks, of
companies having market capitalizations of less than $1 billion. The Fund may
invest the remainder of its assets in equity securities of larger companies and
in debt securities (including convertible bonds) and may hold a portion of its
assets in cash or money market instruments. Debt securities in which the Fund
may invest will be rated, at the time of investment, at least Baa by Moody's or
BBB by Standard & Poor's or, if unrated, determined by Schroder at the time of
investment to be of comparable quality. Securities rated Baa or BBB lack
outstanding investment characteristics and have speculative characteristics and
are subject to greater credit and market risks than higher-rated securities.
At times Schroder may judge that conditions in the securities markets make
pursuing the Fund's basic investment strategy inconsistent with the best
interests of its shareholders. At such times, Schroder may temporarily use
alternate investment strategies primarily designed to reduce fluctuations in the
value of the Fund's assets. In implementing these "defensive" strategies, the
Fund would invest any portion of its assets in high-quality debt securities, or
hold any portion of its assets in cash or money market instruments, to the
extent Schroder might consider consistent with such defensive strategies. It is
impossible to predict when, or for how long, the Fund will use these alternate
strategies.
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SCHRODER MIDCAP VALUE FUND
SCHRODER MIDCAP VALUE FUND'S INVESTMENT OBJECTIVE IS TO SEEK LONG-TERM CAPITAL
APPRECIATION. The Fund invests primarily in publicly traded common stocks of
"mid-cap" companies -- companies with market capitalizations of between $750
million and $5 billion. In selecting investments for the Fund, Schroder tries to
identify companies that have good prospects for earnings growth and whose
price-to-earnings ratios are lower than the average price-to-earnings ratios of
comparable companies.
Schroder believes that certain mid-cap companies may be undervalued and may
offer greater opportunities for capital appreciation than larger companies, for
a number of reasons. For example, many mid-cap companies have not attracted
substantial coverage by Wall Street analysts or a substantial institutional
following. As a result, many investors may not have recognized the full values
of such companies or of their potential for earnings growth, or of their
financial or business assets. In addition, a mid-cap company may, because of its
smaller size, be able to adapt more quickly to competitive or economic changes
than larger, longer established companies.
For similar reasons, mid-cap companies may present different investment risks
than do large-cap companies. Such companies may have limited product lines,
markets, or financial resources and may depend on a limited management group.
Their securities may trade less frequently and in smaller volume than more
widely held securities, and their values may fluctuate more sharply than other
securities. There may be less publicly available information about the issuers
of these securities or less market interest in such securities than in the case
of larger companies. Schroder's strategy for the Fund includes investing in
certain stocks before other investors recognize their value. The result could be
a lack of stock price movement in the short term. Investors should therefore
have a long-term investment horizon when investing in the Fund.
Although the Fund will seek to invest principally in common stocks, it may also
invest in preferred stocks, warrants, and securities convertible into common or
preferred stocks if Schroder believes such investments would help achieve the
Fund's objective. Under normal circumstances, the Fund will invest at least 65%
of its total assets in securities of companies determined by Schroder to be
"mid-cap" companies. The Fund may hold a portion of its assets in cash or money
market instruments.
At times Schroder may judge that conditions in the securities markets make
pursuing the Fund's basic investment strategy inconsistent with the best
interests of its shareholders. At such times, Schroder may temporarily use
alternate investment strategies primarily designed to reduce fluctuations in the
value of the Fund's assets. In implementing these "defensive" strategies, the
Fund would invest any portion of its assets in high-quality debt securities, or
hold any portion of its assets in cash or money market instruments, to the
extent Schroder might consider consistent with such defensive strategies. It is
impossible to predict when, or for how long, the Fund will use these alternate
strategies.
SCHRODER INVESTMENT GRADE INCOME FUND
SCHRODER INVESTMENT GRADE INCOME FUND'S INVESTMENT OBJECTIVE IS TO SEEK CURRENT
INCOME CONSISTENT WITH PRESERVATION OF CAPITAL. Growth of capital is a secondary
objective, to the extent consistent with the Fund's principal objective. The
Fund may invest in debt securities, including securities issued or guaranteed as
to principal or interest by the U.S. Government or any of its agencies or
instrumentalities and corporate obligations, preferred stocks, and dividend-
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paying common stocks. The Fund will normally invest at least 90% of its total
assets in U.S. Government securities and in debt securities and preferred stocks
rated investment grade (or, if unrated, considered by Schroder to be of
comparable quality). A security will be considered to be of "investment grade"
if, at the time of investment by the Fund, it is rated at least Baa3 by Moody's
or BBB- by Standard & Poor's or, if unrated, determined by Schroder to be of
comparable quality. The Fund will not invest in a security rated below A3 or A-
if as a result more than 25% of the Fund's assets would, at the time of such
investment, be invested in securities rated below those rating categories. The
Fund may invest in mortgage-backed certificates and other securities
representing ownership interests in mortgage pools, including collateralized
mortgage obligations, some of which may be backed by agencies or
instrumentalities of the U.S. Government. The Fund may hold a portion of its
assets in cash or money market instruments.
Schroder may take full advantage of the entire range of maturities of the
securities in which the Fund may invest and may adjust the average maturity of
the Fund's portfolio from time to time, depending on its assessment of relative
yields on securities of different maturities and expectations of future changes
in interest rates. Thus, at certain times the average maturity of the portfolio
may be relatively short (from under one year to five years, for example) and at
other times may be relatively long (more than 10 years, for example).
Higher-rated securities do not involve the degree of credit risk associated with
investments in lower quality fixed-income securities, although, as a result, the
yields available from higher-rated securities are generally lower than the
yields available from many other fixed-income securities. Like other
fixed-income securities, however, the values of higher-rated securities change
as interest rates fluctuate. Fluctuations in the value of the Fund's securities
generally will not affect interest income on securities already held by the
Fund, but will be reflected in the Fund's net asset value. Because the magnitude
of these fluctuations generally will be greater at times when the Fund's average
maturity is longer, under certain market conditions the Fund may invest in
short-term investments yielding lower current income rather than invest in
higher yielding longer-term securities. Securities rated Baa or BBB lack
outstanding investment characteristics and have speculative characteristics and
are subject to greater credit and market risks than higher-rated securities.
At times Schroder may judge that conditions in the securities markets make
pursuing the Fund's basic investment strategy inconsistent with the best
interests of its shareholders. At such times, Schroder may temporarily use
alternate investment strategies primarily designed to reduce fluctuations in the
value of the Fund's assets. In implementing these "defensive" strategies, the
Fund would be permitted to hold all or any portion of its assets in cash or
money market instruments. It is impossible to predict when, or for how long, the
Fund will use these alternate strategies.
OTHER INVESTMENT PRACTICES AND RISK CONSIDERATIONS
The Funds may also engage in the following investment practices, each of which
involves certain special risks. The Statement of Additional Information contains
more detailed information about these practices (some of which may be considered
"derivative" investments), including limitations designed to reduce these risks.
OPTIONS AND FUTURES PORTFOLIO STRATEGIES. Each of the Funds may engage in a
variety of transactions involving the use of options and futures contracts for
purposes of increasing its investment return or hedging against market changes.
A Fund may seek to increase its current return by writing covered call options
and covered put options on its portfolio securities or other securities in which
it may invest. A Fund receives a premium from writing a call or put option,
which increases the Fund's return if the option expires unexercised or is closed
out at a net profit. A Fund may also buy and sell put and call
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options on such securities for hedging purposes. When a Fund writes a call
option on a portfolio security, it gives up the opportunity to profit from any
increase in the price of the security above the exercise price of the option;
when it writes a put option, a Fund takes the risk that it will be required to
purchase a security from the option holder at a price above the current market
price of the security. A Fund may terminate an option that it has written prior
to its expiration by entering into a closing purchase transaction in which it
purchases an option having the same terms as the option written. A Fund may also
from time to time buy and sell combinations of put and call options on the same
underlying security to earn additional income.
A Fund may buy and sell index futures contracts. An "index future" is a contract
to buy or sell units of a particular index at an agreed price on a specified
future date. Depending on the change in value of the index between the time when
a Fund enters into and terminates an index future transaction, the Fund may
realize a gain or loss. A Fund may also purchase warrants, issued by banks or
other financial institutions, whose values are based on the values from time to
time of one or more securities indices.
A Fund may buy and sell futures contracts on U.S. Government securities or other
debt securities. A futures contract on a debt security is a contract to buy or
sell a certain amount of the debt security at an agreed price on a specified
future date. Depending on the change in the value of the security when the Fund
enters into and terminates a futures contract, the Fund realizes a gain or loss.
A Fund may purchase and sell options on futures contracts or on securities
indices in addition to or as an alternative to purchasing and selling futures
contracts.
A Fund may purchase and sell futures contracts, options on futures contracts,
and options on securities indices for hedging purposes or, to the extent
permitted by applicable law, to increase its current return.
RISK FACTORS IN OPTIONS AND FUTURES TRANSACTIONS. Options and futures
transactions involve costs and may result in losses. The use of options and
futures involves certain special risks, including the risks that a Fund may be
unable at times to close out such positions, that hedging transactions may not
accomplish their purpose because of imperfect market correlations, or that
Schroder may not forecast market movements correctly.
The effective use of options and futures strategies is dependent on, among other
things, a Fund's ability to terminate options and futures positions at times
when Schroder deems it desirable to do so. Although a Fund will enter into an
option or futures contract position only if Schroder believes that a liquid
secondary market exists for that option or futures contract, there is no
assurance that a Fund will be able to effect closing transactions at any
particular time or at an acceptable price.
Each Fund generally expects that its options and futures contract transactions
will be conducted on recognized exchanges. In certain instances, however, a Fund
may purchase and sell options in the over-the-counter markets. A Fund's ability
to terminate options in the over-the-counter markets may be more limited than
for exchange-traded options and may also involve the risk that securities
dealers participating in such transactions would be unable to meet their
obligations to a Fund. A Fund will, however, engage in over-the-counter
transactions only when appropriate exchange-traded transactions are unavailable
and when, in the opinion of Schroder, the pricing mechanism and liquidity of the
over-the-counter
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markets are satisfactory and the participants are responsible parties likely to
meet their contractual obligations. A Fund will treat over-the-counter options
(and, in the case of options sold by the Fund, the underlying securities held by
the Fund) as illiquid investments as required by applicable law.
The use of options and futures strategies also involves the risk of imperfect
correlation between movements in the prices of options and futures contracts and
movements in the value of the underlying securities or index, or in the prices
of the securities that are the subject of a hedge. The successful use of these
strategies further depends on the ability of Schroder to forecast market
movements correctly.
Because the markets for certain options and futures contracts in which a Fund
will invest (including markets located in foreign countries) are relatively new
and still developing and may be subject to regulatory restraints, a Fund's
ability to engage in transactions using such investments may be limited. A
Fund's ability to engage in hedging transactions may be limited by certain
regulatory and tax considerations. A Fund's hedging transactions may affect the
character or amount of its distributions. The tax consequences of certain
hedging transactions have been modified by the Taxpayer Relief Act of 1997.
For more information about any of the options or futures portfolio transactions
described above, see the Statement of Additional Information.
MORTGAGE-BACKED SECURITIES. Each Fund may invest a portion of its assets in
mortgage-backed certificates and other securities representing ownership
interests in mortgage pools, including collateralized mortgage obligations.
Interest and principal payments on the mortgages underlying mortgage-backed
securities are passed through to the holder of the mortgage-backed securities.
Prepayments of principal and interest on mortgages underlying mortgage-backed
securities may shorten the effective maturity of certain of such obligations.
Generally, prepayment rates increase if interest rates fall and decrease if
interest rates rise. For many types of mortgage-backed securities, this can
result in unfavorable changes in price and yield characteristics in response to
changes in interest rates and other market considerations.
Mortgage-backed securities have yield and maturity characteristics that are
dependent upon the mortgages underlying them. Thus, unlike traditional debt
securities, which may pay a fixed rate of interest until maturity when the
entire principal amount comes due, payments on these securities may include both
interest and a partial payment of principal. In addition to scheduled loan
amortization, payments of principal may result from the voluntary prepayment,
refinancing, or foreclosure of the underlying mortgage loans. Such prepayments
may significantly shorten the effective maturities of mortgage-backed
securities, especially during periods of declining interest rates. Similarly,
during periods of rising interest rates, a reduction in the rate of prepayments
may significantly lengthen the effective maturities of such securities.
Mortgage-backed securities currently offer yields higher than those available
from many other types of debt securities, but their price volatility and yield
characteristics change based on increases and decreases in prepayment rates, and
they are less effective than other types of securities as a means of "locking
in" attractive long-term interest rates. This is caused by the need to reinvest
prepayments of principal generally and the possibility of significant
unscheduled prepayments resulting from declines in mortgage interest rates.
These prepayments would have to be reinvested at the lower rates. As a result, a
Fund's mortgage-backed securities may have less potential for capital
appreciation during periods of declining interest rates than other debt
securities of comparable maturities, although such obligations may have a
comparable risk of decline in market value during periods of rising interest
rates.
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ZERO-COUPON BONDS. Each Fund which may invest in debt securities may invest in
zero-coupon bonds. Zero-coupon bonds are issued at a significant discount from
face value and pay interest only at maturity rather than at intervals during the
life of the security. Zero-coupon bonds allow an issuer to avoid the need to
generate cash to meet current interest payments and, as a result, may involve
greater credit risks than bonds that pay interest currently.
SECURITIES LOANS, REPURCHASE AGREEMENTS, AND FORWARD COMMITMENTS. Each Fund may
lend portfolio securities amounting to not more than 25% of its assets to
broker-dealers, and may enter into repurchase agreements on up to 25% of its
assets. These transactions must be fully collateralized at all times, but
involve some risk to a Fund if the other party should default on its obligation
and the Fund is delayed or prevented from recovering the collateral. Each Fund
may also purchase securities for future delivery, which may increase its overall
investment exposure and involves a risk of loss if the value of the securities
declines prior to the settlement date.
FOREIGN INVESTMENTS. Each Fund may invest without limit in securities
principally traded in foreign markets, although it is not currently expected
that any of the Funds will invest in securities of foreign issuers to a
substantial degree. Each Fund may also purchase Eurodollar certificates of
deposit without limitation. Because foreign securities are normally denominated
and traded in foreign currencies, the values of a Fund's assets may be affected
favorably or unfavorably by currency exchange rates and exchange control
regulations. There may be less information publicly available about a foreign
company than about a U.S. company, and foreign companies are not generally
subject to accounting, auditing, and financial reporting standards and practices
comparable to those in the United States. The securities of some foreign
companies are less liquid and at times more volatile than securities of
comparable U.S. companies. Foreign brokerage commissions and other fees are also
generally higher than in the United States. Foreign settlement procedures and
trade regulations may involve certain risks (such as delay in payment or
delivery of securities or in the recovery of a Fund's assets held abroad) and
expenses not present in the settlement of domestic investments.
In addition, with respect to certain foreign countries, there is a possibility
of nationalization or expropriation of assets, imposition of currency exchange
controls, confiscatory taxation, political or financial instability, and
diplomatic developments which could affect the value of investments in those
countries. In certain countries, legal remedies available to investors may be
more limited than those available with respect to investments in the United
States or other countries. The laws of some foreign countries may limit a Fund's
ability to invest in securities of certain issuers located in those countries.
Special tax considerations apply to foreign securities.
A Fund may buy or sell foreign currencies, foreign currency forward contracts,
and options on foreign currencies for hedging purposes in connection with its
foreign investments.
LIQUIDITY. A Fund will not invest more than 15% of its net assets in securities
determined by Schroder to be illiquid. Certain securities that are restricted as
to resale may nonetheless be resold by a Fund in accordance with Rule 144A under
the Securities Act of 1933, as amended. Such securities may be determined by
Schroder to be liquid for purposes of compliance with the limitation on a Fund's
investment in illiquid securities. There can, however, be no assurance that a
Fund will be able to sell such securities at any time when Schroder deems it
advisable to do so or at prices prevailing for comparable securities that are
more widely held.
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SCHRODER SERIES TRUST
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PORTFOLIO TURNOVER
The length of time a Fund has held a particular security is not generally a
consideration in investment decisions. The investment policies of a Fund may
lead to frequent changes in the Fund's investments, particularly in periods of
volatile market movements. A change in the securities held by a Fund is known as
"portfolio turnover." Portfolio turnover generally involves some expense to a
Fund, including brokerage commissions or dealer mark-ups and other transaction
costs on the sale of securities and reinvestment in other securities. Such sales
may result in realization of taxable capital gains. The portfolio turnover rates
for the following Funds' most recent fiscal year were as follows: Schroder Large
Capitalization Equity Fund -- 56.38%; Schroder Small Capitalization Value Fund
- -- 81.63%; Schroder Investment Grade Income Fund -- 68.76%. The MidCap Value
Fund's annual portfolio turnover rate is expected to be less than 100%.
HOW TO BUY SHARES
You can purchase Advisor Shares of any of the Funds through a Service
Organization such as a bank, trust company, broker-dealer, or other financial
organization having an arrangement with Schroder Fund Advisors Inc. If you do
not have a Service Organization, Schroder Fund Advisors Inc. can provide you
with a list of available firms. Your Service Organization is responsible for
forwarding all of the necessary documentation to the Trust, and may charge for
its services.
Advisor Shares are sold at their net asset value per share next determined after
the Trust receives your order. The minimum initial investment in Advisor Shares
of a Fund is $2,500, except that the minimum for an IRA account is $2,000. In
order for you to receive the net asset value determined on any day, Schroder
Fund Advisors Inc. must receive your order before the close of regular trading
on the New York Stock Exchange on that day.
If Advisor Shares purchased by you will be held in your own name (rather than in
the name of your Service Organization), payment for your shares must be
accompanied by a completed Account Application in proper form. The Trust or
Boston Financial Data Services, Inc., the Trust's transfer agent (the "Transfer
Agent"), may request additional documentation, such as copies of corporate
resolutions and instruments of authority, from corporations, administrators,
executors, personal representatives, directors, or custodians. You may obtain an
Account Application from your Service Organization.
Each Fund reserves the right to reject any purchase, in whole or in part, and to
suspend the offering of its shares for any period of time and to change or waive
any minimum investment amounts.
DISTRIBUTION PLANS. Schroder Fund Advisors Inc. serves as distributor of the
Trust's shares. Each Fund has adopted a Distribution Plan pursuant to which the
Fund may pay Schroder Fund Advisors Inc. compensation in an amount limited in
any fiscal year to the annual rate of 0.50% of the Fund's average daily net
assets attributable to its Advisor Shares. The Funds presently make no payments
under the Distribution Plans, although the Trustees may at any time authorize
payments at an annual rate of up to 0.50% of a Fund's average daily net assets
attributable to its Advisor Shares.
Payments under a Fund's Shareholder Servicing Plan for Advisor Shares will be
considered to have been made pursuant to the Fund's Distribution Plan, to the
extent such payments may be deemed to be primarily intended to result in the
sale of the Fund's Advisor Shares.
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SCHRODER SERIES TRUST
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HOW TO SELL SHARES
You can sell your Advisor Shares in a Fund to that Fund any day the New York
Stock Exchange is open, either through your Service Organization or directly to
the Fund. If your shares are held in the name of a Service Organization, you may
only sell the shares through that Service Organization. A Fund will only redeem
shares for which it has received payment.
SELLING SHARES THROUGH YOUR SERVICE ORGANIZATION
Your Service Organization and the Transfer Agent must receive your request
before the close of regular trading on the New York Stock Exchange to receive
that day's net asset value. Your Service Organization will be responsible for
furnishing all necessary documentation to the Transfer Agent, and may charge you
for its services.
SELLING SHARES DIRECTLY TO A FUND
If your Advisor Shares of a Fund are held in your own name (rather than in the
name of your Service Organization), you may redeem your shares by mailing a
written request for redemption to the Transfer Agent that:
(1) states the number of shares or dollar amount to be redeemed;
(2) identifies your account number; and
(3) is signed by you and all other owners of the account exactly as their names
appear on the account.
If you request that the proceeds from your redemption be sent to you at an
address other than your address of record, or to another party, you must include
a signature guarantee for each such signature by an eligible signature
guarantor, such as a member firm of a national securities exchange or a
commercial bank or trust company located in the United States. If you are a
resident of a foreign country, another type of certification may be required.
Please contact the Transfer Agent for more details at 1-800-464-3108.
Corporations, fiduciaries, and other types of shareholders may be required to
supply additional documents which support their authority to effect a
redemption.
WIRE TRANSFER. If your Service Organization receives Federal Reserve wires, you
may instruct that your redemption proceeds be forwarded by wire to your account
with your Service Organization; you may also instruct that your redemption
proceeds be forwarded to you by a wire transfer. Please indicate your Service
Organization's or your own complete wiring instructions. The Funds will forward
proceeds from telephone redemptions only to the bank or brokerage account that
you have authorized in writing.
Schroder Fund Advisors Inc., Schroder, or their affiliates may, at their own
expense and out of their own assets, provide compensation to dealers or other
financial intermediaries in connection with sales of Trust shares or shareholder
servicing. In some instances, this compensation may be made available only to
certain dealers or other financial intermediaries who have sold or are expected
to sell significant amounts of shares of the Trust.
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SCHRODER SERIES TRUST
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GENERAL REDEMPTION POLICIES
The redemption price per share is the net asset value per share next determined
after the Transfer Agent receives the request for redemption in proper form, and
each Fund will make payment for redeemed shares within seven days thereafter.
Under unusual circumstances, a Fund may suspend repurchases, or postpone payment
of redemption proceeds for more than seven days, as permitted by federal
securities law. If you purchase shares of a Fund by check (including certified
check) and redeem them shortly thereafter, the Fund will delay payment of the
redemption proceeds for up to fifteen days after the Fund's receipt of the check
or until the check has cleared, whichever occurs first. If you redeem shares
through your Service Organization, your Service Organization is responsible for
ensuring that the Transfer Agent receives your redemption request in proper form
and at the appropriate time.
EXCHANGES
You can exchange your Advisor Shares of any Fund for Advisor Shares of any other
Fund at any time at their respective net asset values. Contact your Service
Organization or the Transfer Agent for details. For federal income tax purposes,
an exchange is treated as a sale of shares and generally results in a capital
gain or loss. The Trust reserves the right to change or suspend the exchange
privilege at any time. Shareholders would be notified of any such change or
suspension.
DETERMINATION OF NET ASSET VALUE
EACH FUND CALCULATES THE NET ASSET VALUE OF ITS ADVISOR SHARES BY DIVIDING THE
TOTAL VALUE OF ITS ASSETS ATTRIBUTABLE TO ITS ADVISOR SHARES, LESS ITS
LIABILITIES ATTRIBUTABLE TO THOSE SHARES, BY THE NUMBER OF ITS ADVISOR SHARES
OUTSTANDING. Shares are valued as of the close of regular trading on the New
York Stock Exchange each day the Exchange is open. Portfolio securities for
which market quotations are readily available are stated at market value. Short-
term investments that will mature in 60 days or less are stated at amortized
cost, which approximates market value. All other securities and assets are
valued at their fair values determined by Schroder. The net asset value of a
Fund's Advisor Shares will generally differ from that of its other classes of
shares due to the variance in daily net income realized by and dividends paid on
each class of shares, and any differences in the expenses of the different
classes.
DISTRIBUTIONS
SCHRODER LARGE CAPITALIZATION EQUITY FUND, SCHRODER SMALL CAPITALIZATION VALUE
FUND, AND SCHRODER MIDCAP VALUE FUND. The Large Capitalization Equity Fund, the
Small Capitalization Value Fund, and the MidCap Value Fund distribute any net
investment income and any net realized capital gains at least annually.
Distributions from net investment income, if any, are expected to be small.
Distributions from net capital gains are made after applying any available
capital loss carryovers.
SCHRODER INVESTMENT GRADE INCOME FUND. The Investment Grade Income Fund
distributes net investment income monthly and any net realized capital gains at
least annually. Distributions from capital gains are made after applying any
available capital loss carryovers.
YOU CAN CHOOSE FROM THREE DISTRIBUTION OPTIONS: (1) reinvest all distributions
in additional Advisor Shares of your Fund; (2) receive distributions from net
investment income in cash while reinvesting capital gains distributions in
additional Advisor Shares; or (3) receive all distributions in cash. You can
change your distribution option by notifying the
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SCHRODER SERIES TRUST
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Transfer Agent in writing. If you do not select an option when you open your
account, all distributions by a Fund will be reinvested in Advisor Shares of
that Fund. You will receive a statement confirming reinvestment of distributions
in additional Fund shares promptly following the period in which the
reinvestment occurs.
TAXES
Each Fund intends to qualify as a "regulated investment company" for federal
income tax purposes and to meet all other requirements that are necessary for it
to be relieved of federal taxes on income and gains it distributes to
shareholders. A Fund will distribute substantially all of its net investment
income and net capital gain income on a current basis. A Fund's distributions
will be taxable to you as ordinary income to the extent derived from the Fund's
investment income and net short-term gains (that is, net gains from capital
assets held for not more than a year). Distributions designated by a Fund as
deriving from net gains on capital assets held for more than 1 year but not more
than 18 months and from net gains on capital assets held for more than 18 months
will be taxable to you as such, regardless of how long you have held the shares.
Distributions will be taxable as described above whether received in cash or in
shares through the reinvestment of distributions.
Early in each year the Trust will notify you of the amount and tax status of
distributions paid to you by each of the Funds for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in a Fund. You should consult your tax adviser to determine the
precise effect of an investment in a Fund on your particular tax situation.
In order to permit Schroder Investment Grade Income Fund to maintain a more
stable monthly dividend, that Fund may from time to time pay out less than the
entire amount of net investment income earned in any particular period. Any such
amount retained by the Fund would be available to stabilize future dividends. As
a result, the dividends paid by the Fund for any particular period may be more
or less than the amount of net investment income actually earned by the Fund
during the period. None of the Funds intends to distribute in respect of any
taxable year more than the Fund's net income for federal income tax purposes for
that year, nor does any of the Funds intend to stabilize its dividends in any
year in such a manner as to cause the Fund to pay federal tax.
In order to avoid dilution of the undistributed net investment income of
Schroder Investment Grade Income Fund, that Fund follows an accounting practice
known as "equalization." A portion of the purchase price paid for shares of the
Fund (including shares purchased by reinvestment of Fund distributions) equal to
the undistributed net investment income per share of the Fund at the time of
purchase is segregated for accounting purposes and is available for payment of
future dividends. As a result, future dividends may include a non-taxable return
of capital to shareholders.
MANAGEMENT OF THE TRUST
The Trustees of the Trust are responsible for generally overseeing the conduct
of the Trust's business. The Trust's investment adviser is Schroder Capital
Management Inc. ("Schroder"). Schroder is a wholly owned subsidiary of Schroders
Incorporated, which engages through its subsidiary firms in the investment
banking, asset management, and securities businesses. Affiliates of Schroders
Incorporated (or their predecessors) have been investment managers since 1927.
Schroder itself has been an investment manager since 1962, and served as
investment manager for approximately $4.4
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SCHRODER SERIES TRUST
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billion as of June 30, 1997. Schroders Incorporated is an indirect, wholly owned
U.S. subsidiary of Schroders plc, a publicly owned holding company organized
under the laws of England. Schroders plc and its affiliates engage in
international merchant banking and investment management businesses, and as of
June 30, 1997, had under management assets of approximately $150 billion.
Schroder Fund Advisors Inc. is a wholly owned subsidiary of Schroder Capital
Management International Inc. Schroder Capital Management International Inc. is
also a wholly owned subsidiary of Schroders Incorporated.
Subject to such policies as the Trustees may determine, Schroder furnishes a
continuing investment program for the Funds and makes investment decisions on
their behalf. Subject to the control of the Trustees, Schroder also manages the
Trust's other affairs and business. The Trust's principal office is located at
787 Seventh Avenue, New York, New York 10019 (which is also the address of
Schroder's principal office), and its telephone number is (212) 641-3900.
Schroder has served as investment adviser to the Trust since its inception.
The Funds pay management fees to Schroder monthly at the following annual rates
(based on the assets of each Fund taken separately): Schroder Large
Capitalization Equity Fund -- 0.75% of the Fund's average net assets; Schroder
Small Capitalization Value Fund -- 0.95% of the Fund's average net assets;
Schroder MidCap Value Fund -- 0.90% of the Fund's average net assets; and
Schroder Investment Grade Income Fund -- 0.50% of the Fund's average net assets.
In order to limit the Funds' expenses, Schroder has voluntarily agreed to reduce
its compensation (and, if necessary, to pay certain expenses of each of the
Funds) until October 31, 1997 (October 31, 1998 for the MidCap Value Fund) with
respect to each of the Funds to the extent that a Fund's expenses (other than
Schroder's compensation, brokerage, interest, taxes, deferred organizational
expenses, shareholder service fees, and extraordinary expenses) exceed the
following annual rates: Schroder Large Capitalization Equity Fund -- 0.80% of
the Fund's average net assets; Schroder Small Capitalization Value Fund -- 0.75%
of the Fund's average net assets; Schroder MidCap Value Fund -- 0.45% of the
Fund's average net assets; and Schroder Investment Grade Income Fund -- 0.62% of
the Fund's average net assets. The Trust pays all expenses not assumed by
Schroder, including Trustees' fees, auditing, legal, custodial, and investor
servicing and shareholder reporting expenses.
Schroder's investment decisions for each of the Funds are generally made by a
committee of Schroder's investment professionals. Mr. Paul Morris, Director and
Portfolio Manager at Schroder, is primarily responsible for making
recommendations to the committee for Schroder Large Capitalization Equity Fund.
Ms. Nancy B. Tooke, Director, Senior Vice President and Portfolio Manager at
Schroder, is primarily responsible for making recommendations to the committee
for Schroder Small Capitalization Value Fund. Ms. Tooke and Locke W. Ogens,
First Vice President and Portfolio Manager at Schroder, are primarily
responsible for making recommendations to the committee for Schroder MidCap
Value Fund. Mr. Gary S. Zeltzer, Group Vice President and Portfolio Manager at
Schroder, is primarily responsible for making recommendations to the committee
for Schroder Investment Grade Income Fund. Each of the persons named has had
that responsibility since the organization of the Funds (other than Mr. Morris,
who has had that responsibility since March 1997) and has several years of
experience in managing investment portfolios comparable to those for which each
has such responsibility.
Schroder places all orders for purchases and sales of the Funds' securities. In
selecting broker-dealers, Schroder may consider research and brokerage services
furnished to it and its affiliates. Schroder & Co. Inc. and Lewco Securities
Corp., affiliates of Schroder, may receive brokerage commissions from the Funds
in accordance with procedures adopted by the
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Trustees under the Investment Company Act of 1940 which require periodic review
of these transactions. Subject to seeking the most favorable price and execution
available, Schroder may consider sales of shares of the Funds as a factor in the
selection of broker-dealers.
SHAREHOLDER SERVICING PLAN. The Trust has adopted a Shareholder Servicing Plan
(the "Service Plan") for the Advisor Shares of each Fund. Under the Service
Plan, each Fund pays fees to Schroder Fund Advisors Inc. at an annual rate of up
to 0.25% of the average daily net assets of the Fund represented by Advisor
Shares. Schroder Fund Advisors Inc. may enter into shareholder service
agreements with Service Organizations pursuant to which the Service
Organizations provide administrative support services to their customers who are
Fund shareholders. In return for providing these support services, a Service
Organization may receive payments from Schroder Fund Advisors Inc. at a rate not
exceeding 0.25% of the average daily net assets of the Advisor Shares of each
Fund for which the Service Organization is the Service Organization of record.
These administrative services may include, but are not limited to, the following
functions: establishing and maintaining accounts and records relating to clients
of the Service Organization; answering shareholder inquiries regarding the
manner in which purchases, exchanges, and redemptions of Advisor Shares of the
Trust may be effected and other matters pertaining to the Trust's services;
providing necessary personnel and facilities to establish and maintain
shareholder accounts and records; assisting shareholders in arranging for
processing purchase, exchange, and redemption transactions; arranging for the
wiring of funds; guaranteeing shareholder signatures in connection with
redemption orders and transfers and changes in shareholder-designated accounts;
integrating periodic statements with other customer transactions; and providing
such other related services as the shareholder may request. Some Service
Organizations may impose additional conditions or fees, such as requiring
clients to invest more than the minimum amounts required by the Trust for
initial or subsequent investments or charging a direct fee for services. Such
fees would be in addition to any amounts which might be paid to the Service
Organization by Schroder Fund Advisors Inc. Please contact your Service
Organization for details.
PERFORMANCE INFORMATION
Yield and total return data relating to Advisor Shares of the Funds may from
time to time be included in advertisements about the Funds. The "yield" of a
Fund's Advisor Shares is calculated by dividing the Fund's annualized net
investment income per Advisor Shares during a recent 30-day period by the net
asset value per Advisor Shares on the last day of that period. When a Fund's
total return is advertised with respect to Advisor Shares, it will be calculated
for the past year, the past five years, and the past ten years (or if a Fund's
Advisor Shares have been offered for a period shorter than one, five, or ten
years, that period will be substituted) through the most recent calendar
quarter, as more fully described in the Statement of Additional Information.
Advertisements about a Fund may include total return information for the Fund's
Investor Shares for periods prior to the initial offering date of the Fund's
Advisor Shares (for all Funds except the MidCap Value Fund); that information
may be adjusted to reflect the actual fees and expenses attributable to the
Advisor Shares that were not applicable to the Fund's Investor Shares during the
periods presented. Total return for any period of one year or less represents
the actual rate of return on such an investment earned during the period,
although annualized figures may also be shown in advertisements. Total return
quotations assume that all dividends and distributions are reinvested when paid.
ALL DATA IS BASED ON PAST INVESTMENT RESULTS AND DOES NOT PREDICT FUTURE
PERFORMANCE. Investment performance of a Fund's Advisor Shares, which will vary,
is based on many factors, including market conditions, the composition of each
Fund's portfolio, and each Fund's operating expenses attributable to Advisor
Shares. Investment performance also often
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reflects the risks associated with each Fund's investment objectives and
policies. Quotations of yield or total return for any period when an expense
limitation is in effect will be greater than if the limitation had not been in
effect. These factors should be considered when comparing the investment results
of a Fund's Advisor Shares to those of various classes of other mutual funds and
other investment vehicles. Performance for each Fund's Advisor Shares may be
compared to various indices. See the Statement of Additional Information for
more information.
ADDITIONAL INFORMATION ABOUT THE TRUST
The Trust was established as a Massachusetts business trust in 1993. The Trust
has an unlimited number of shares of beneficial interest that may, without
shareholder approval, be divided into an unlimited number of series of such
shares, which, in turn, may be divided into an unlimited number of classes of
such shares. The Trust's shares of beneficial interest are presently divided
into five different series (four of which are offered in this Prospectus). Each
Fund's shares are presently divided into two classes, Advisor Shares, which are
offered through this Prospectus, and Investor Shares, which are offered through
a separate prospectus. Unlike Advisor Shares, Investor Shares are not subject to
shareholder service fees and distribution fees, which will affect their
performance relative to Advisor Shares. To obtain more information about
Investor Shares, contact Schroder Series Trust at (800) 464-3108.
Each share has one vote, with fractional shares voting proportionally.
Shareholders of a class of shares or series generally have separate voting
rights with respect to matters that affect only that class or series. See
"Organization and Capitalization" in the Statement of Additional Information.
Shares are freely transferable and are entitled to dividends and other
distributions as declared by the Trustees. Dividends and other distributions
paid by the Funds on their two classes of shares will normally differ in amount
due to the differing expenses borne by the two classes. If a Fund were
liquidated, each class of shares would receive the net assets of the Fund
attributable to that class. A Fund may suspend the sale of shares at any time
and may refuse any order to purchase shares. Although the Trust is not required
to hold annual meetings of its shareholders, shareholders have the right to call
a meeting to elect or remove Trustees, or to take other actions as provided in
the Declaration of Trust.
Due to their ownership of shares of certain of the Funds, the Schroder & Co.
Inc. Profit-Sharing, Savings Incentive, and Pension Plans and the Lewco
Securities Corp. Profit-Sharing, Thrift, and Pension Plans may be deemed to
control those Funds. See the Statement of Additional Information.
If you own fewer shares of any Fund than a minimum amount set by the Trustees
(presently 50 shares), the Trust may choose to redeem your shares in that Fund
and pay you for them. You will receive at least 30 days' written notice before
the Trust redeems your shares, and you may purchase additional shares at any
time to avoid a redemption. The Trust may also redeem shares if you own shares
of any Fund above a maximum amount set by the Trustees. There is currently no
maximum, but the Trustees may establish one at any time, which could apply to
both present and future shareholders.
Schroder Fund Advisors Inc., 787 Seventh Avenue, New York, New York 10019, is
the principal underwriter for the Trust. State Street Bank and Trust Company,
225 Franklin Street, Boston, Massachusetts 02110, is the Trust's administrator
and custodian. The Trust currently pays State Street fees for its services as
administrator at the annual rate of 0.08% of each Fund's average daily net
assets (subject to certain minimum charges). The Trust's transfer agent and
registrar is Boston Financial Data Services, Inc., Two Heritage Drive, Quincy,
Massachusetts 02171.
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[LOGO]
SCHRODER SERIES TRUST
Schroder Large
Capitalization Equity
Fund
Schroder Small
Capitalization Value
Fund
Schroder MidCap
Value Fund
Schroder Investment
Grade Income Fund
Schroder Series Trust
P.O. Box 8507
Advisor Shares
Boston, Mass. 02266
1-800-464-3108
1097WS
PROSPECTUS
June 17, 1997
AS REVISED OCTOBER 8, 1997
